Mighty Tools Hardware runs a network of small hardware retail outlets across the state. All sales are

Question:

Mighty Tools Hardware runs a network of small hardware retail outlets across the state. All sales are made for cash or on credit card and processed through electronic tills. A wide range of goods are stocked by the stores, meaning that the business deals with a large number of suppliers. All goods are purchased on credit with varying terms, depending on the supplier. Invoices are paid by cheque after a package of documents is collated and approved for payment. Ordering of goods and subsequent payments are processed by the central office with delivery direct from supplier to the stores — no central warehouse is used. Mighty Tools uses a perpetual stock system and conducts test counts at regular periods throughout the year.


Required

(a) What controls should exist for inventory movements at the local store level and the central office?

(b) Explain how the stocktake for Mighty Tools Hardware should be audited. What details are most important?

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For  book-img-for-question

Auditing A Practical Approach

ISBN: 9780730364573

3rd Edition

Authors: Robyn Moroney, Fiona Campbell, Jane Hamilton

Question Posted: